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Louis Borders, the founder of the Borders bookstore chain, has wanted to deliver groceries to your door for two decades.
The first iteration of that was Webvan, the grocery delivery business that raised $800 million, then filed for bankruptcy in 2001—two years after its initial public offering—unable to garner enough cash to maintain its high losses. Borders has re-emerged, this time with plans to use robots to get on with it. The challenge will be convincing investors that it will work this time around.
His new venture—Home Delivery Service, or HDS Global—says it has finished building the robotic technology for the fulfillment centers it wants to open. The startup has also added another $5 million of funding into the mix from angel investors, including former Walmart CEO Eduardo Castro-Wright and Rudy Salas, a former senior vice president at Coca Cola.
But that’s still a far cry from original fundraising plans. The company was in talks to get $25 million of Series A funding in May 2020, but that fell through, per Pitchbook. Borders says that smaller rounds of funding have been sufficient and less dilutive, and that the company plans to go out later this year for a larger round. (The company has raised $8 million in funding since then from angel investors, including this round)
With a total of $26 million in debt and equity from Ingram Micro, a handful of angels and initial investors including Toyota Motor since 2013, Borders has moved forward with his ideas, building a technology center in Indianapolis to demo its artificial intelligence-powered robots, which are able to pick and pack items, stack trays, and move goods around the warehouse. These automated workers should be able to keep its warehouse labor costs low, Borders says.
“In a typical fulfillment center—in the warehouse—there would be [around] 200 people to run that, and we will be more like 60,” Borders says. Each fulfillment center will cost $40 million to install and be able to handle capacity for about $200 million in annual sales, he says. Just like Webvan, Borders is envisioning a fleet of on-staff delivery workers and DHS Global vans to drop off groceries within five hours, or in an hour for a premium fee. Unlike Webvan, the fulfillment centers will be smaller, largely robotic, and there will be more of them in a metro area. They’re also taking their time to roll it out.
Borders has his work cut out for him. For one, they’re behind schedule. In May 2020, Borders told Forbes they should be able to start taking orders in 2021. HDS Global is still about six months out from beta testing, Borders says, and it will likely take another 12 months after that to open the first fully-operational fulfillment center in South San Francisco.
Not to mention, Borders is trying to get back into a market that is saturated with dozens of players, ranging from goods delivery companies with their own fulfillment centers, like GoPuff, to “ghost kitchens” for food delivery, thanks to Travis Kalanick.
All of the companies honing in on rapid home-delivery are fighting an uphill battle when it comes to the economics, says Len Sherman, a professor at Columbia Business School, who describes the funding going into this sector as “lunacy.” (Sherman used to work for George Shaheen at Andersen Consulting—before Shaheen went on to become Webvan CEO in 1999)
“We’ve been through this so many times and here we are, again,” Sherman says, adding: “It’s a very, very tough business to make money and distinguish yourself.” Ticket sizes tend to be low, and it’s extraordinarily inefficient to run orders when they come in, according to Sherman. Jokr, a startup focused on instant delivery for local groceries, reportedly told investors that it was losing $159 per order in the U.S., according to data seen by The Information.
Can technology save the bottom line? Borders thinks so, and he has for a long time. He says that there were plenty of customers for Webvan, but it expanded too quickly and quality suffered after it went public (Borders notes he left the company prior to the IPO). There’s a huge opportunity, he says, in being able to sell private-label brands directly to customers and not just distribute your own items.
“That’s the thing that we started out with a long time ago,” he says, adding that the technology wasn’t there, and it still isn’t. “We had to build it ourselves.”
TPG Partners goes public… The Fort Worth, Texas-based alternative asset manager and private equity firm, is hitting the Nasdaq today, under the ticker “TPG.” It’s one of the last large private equity firms to go public. The firm priced shares at $19.50, garnering a $9 billion valuation, and it and its shareholders raised $1 billion from share sales.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
VENTURE DEALS
– Highspot, Seattle, Wash.-based sales engagement platform developer, raised $248 Million in Series F funding led by B Capital Group and D1 Capital Partners.
– Pentera, a Boston and Tel Aviv-based Automated Security Validation company, raised $150 million in funding from investors including K1 Investment Management. Evolution Equity Partners, and Insight Partners.
– MycoWorks, a San Francisco-based mycelium products manufacturer, raised $126 million in Series C funding led by Prime Movers Lab, and was joined by investors including SK Capital Partners, Mirabaud Lifestyle Impact, and Innovation Fund.
– SeekOut, a Bellevue, Wash.-based AI-powered recruiting platform, raised $115 million in Series C funding led by Tiger Global Management and was joined by investors including Founders Circle Capital, Madrona Venture Group, and Mayfield.
– Jaanuu, a San Diego-based physician-led scrubs brand, raised $75 million in Series B funding led by Eurazeo.
– DexCare, a Renton, Wash.-based access optimization company focused on healthcare, raised $50 million in Series B funding led by Transformation Capital and was joined by investors including Kaiser Permanente, Providence Ventures, Mass General Brigham, Define Ventures, Frist Cressey Ventures, and SpringRock Ventures.
– Accrue Savings, a merchant-embedded shopping experience that rewards consumers for saving, raised $25 million in Series A funding led by Tiger Global and was joined by investors including Aglaé Ventures, Maple VC, UPS CEO Carol Tomé, Fanatics CEO Michael Rubin, Twelve Below, Box Group, and Red Sea Ventures.
– Conduit, a Boston-based API for decentralized finance products, raised $17 million in funding led by Portage Ventures and was joined by Diagram Ventures, FinVC, Gemini Frontier Fund, Gradient Ventures, and Jump Capital.
– Flashtract, an Atlanta, Ga.-based cloud-based software company for billing and payments for construction projects, raised $15 million in Series A funding led by Addition and Shine Capital.
– Shield, a Ramat Gan, Israel-based workplace intelligence platform for compliance teams, raised $15 million in Series A funding led by Macquarie Capital and OurCrowd and was joined by Mindset Ventures.
– The Helper Bees, an Austin-based insurance technology company, raised $12.8 million in Series B funding led by Trust Ventures and was joined by investors including Silverton Partners, Northwestern Mutual Future Ventures, Impact Engine, and Congress Avenue Ventures.
– Fable, a New York-based direct-to-consumer product innovation brand, raised $9 million in Series A funding led by 14W and was joined by Female Founders Fund and Slow Ventures.
– Acorn Finance, Sacramento, Calif.-based embedded lending marketplace for home improvement financing, raised $8.4 million in Series A funding led by MassMutual Ventures and was joined by investors including Moderne Ventures and Vestigo Ventures.
– Garden Society, a Cloverdale, Calif.-based Wine Country cannabis brand featuring craft gummies, gourmet chocolates, and rosette pre-rolls, raised $7 million in Series A funding led by RJ Primo.
– Paysail, a San Francisco-based invoicing payments platform that leverages asset-backed stablecoins, raised $4 million in seed funding led by Uncork Capital and was joined by investors including Gradient Ventures, Oak HC/FT, and Tribe Capital.
– anotherblock, a Stockholm, Sweden-based blockchain music rights marketplace, raised $1.2 million in a pre-seed funding led by J12 and was joined by King founder Sebastian Knutsson, Stardoll founder Mattias Miksche, and Transmode co-founder Mathias Ackermand.
PRIVATE EQUITY
– American Pacific Group acquired Gym Launch, a Carrollton, Tex.-based coaching program and business training material company to help gym owners increase revenue and improve profitability, and Prestige Labs, a Carrollton, Tex.-based premium fitness and health supplement developer. Financial terms were not disclosed.
– Battery Ventures acquired MadCap Software, a San Diego based provider of single-source, multi-channel content authoring and publishing software. Financial terms were not disclosed.
– Susquehanna Private Capital acquired Spherix Global Insights, an Exton, Penn.-based leading pharmaceutical market insights firm focused on the dermatology, gastroenterology, nephrology, neurology, ophthalmology, and rheumatology specialties. Financial terms were not disclosed.
– SV Labs, a San Francisco Equity Partners portfolio company, acquired Diversified Manufacturing Corporation, a Prescott, Wis.-based contract manufacturer of beauty and personal care products. Financial terms were not disclosed.
– VSS Capital Partners acquired a minority stake in GLOBO Language Solutions, a Wyncote, Penn.-based interpretation services provider. Financial terms were not disclosed.
OTHER
– Aspiration, which formerly agreed to go public via a SPAC merger, acquired Carbon Insights, a Denver, Colo.-based climate tech company that translates spending behavior and transactions into carbon footprints. Financial terms were not disclosed.
– Cloudastructure agreed to acquire Visionful, a San Diego-based smart parking solution for transit providers, commercial companies, hospitals, airports, universities, and municipalities. Financial terms were not disclosed.
– GoFundMe agreed to acquire Classy, a San Diego-based fundraising software company for non-profits, in an all-equity deal. Financial terms were not disclosed.
– Tango acquired AgilQuest, a Richmond, Va.-based employee engagement and hybrid workplace scheduling company. Financial terms were not disclosed.
– Western & Southern Financial Group acquired Fabric Technologies and its subsidiary, Fabric Insurance Agency, a digital life insurance platform and mobile app company. Financial terms were not disclosed.
IPOS
– TPG Partners, a Fort Worth, Texas-based alternative asset manager and private equity firm, and its shareholders raised $1 billion in an offering of 33.9 million shares (16.5% sold by insiders) priced at $29.50 per share. The company posted $2.1 billion in revenue in 2020 and reported net income of $1.4 billion.
– Justworks, a New York-based benefits, payroll, and HR software company, delayed its IPO citing market conditions. Thrive Capital, Bain Capital, Redpoint, and Index Ventures back the firm.
– StockX, a Detroit, Mich.-based sneaker and streetwear brand online marketplace, hired bankers for a planned IPO, per Bloomberg.
– Thyssenkrupp Nucera, Thyssenkrupp’s electrolysis business, plans to raise around $687 million in an IPO, according to Reuters.
FUNDS + FUNDS OF FUNDS
– North Sky Capital, a Wayzata, Minn.-based private equity firm, raised $200 million for a third sustainable infrastructure fund.
– Jumpstart Health Investors, a Nashville, Tenn.-based venture capital firm, raised $55 million for a fund that will invest in Black founder-led healthcare companies.
PEOPLE
– Bernhard Capital Partners, a Baton Rouge, La.-based private equity firm, promoted Mark Spender to partner, Catherine Cusimano to principal, Bryan Poppler to principal, Chris Ringswald to principal, and Jason Badeaux to senior associate.
– Greycroft, a New York-based venture capital firm, promoted Sharla Grass and Bryan Subijano to principals.
– Sumeru Equity Partners, a Foster City, Calif.-based private equity firm, promoted Mark Haller to managing director and Scott McCabe to principal.
Financial Services
